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Our reason for asking that the special appropriation for the P a . eliminated and that in addition a prohibition be placed in the more... bill now under consideration against future efforts of the Departur! IInterior along this line is simply that the Department undertook the van before it had statutory authority and for all we know, it must D 2 responsibility again. We believe that once and for all the neare & Forecasts should be stopped.
So that the members of the committee will have before then be of Y:present Forecasts issued by the Bureau of Mines of the Departments the l:r. & copy of the latest, being no. 22 of March 24, 1937, covering the Does B1937, is submitted herewith, marked "Exhibit C." However, t r sol. the committee will secure copies of all of the Forecasts issued to
e them carefully.
EXHIBIT A Secretary of the Interior, Harold L. Ickes, announced today that he Saturday to telegrams received from Hon. Alfred M. Landon, Goreton ! ALO Reford Bond, chairman of the Oklahoma Corportion Comma.. Terrell and Lon A. Smith of the Texas Railroad Comm:won, in were made for statistical calculations for consideration under appropriate by the respective State authorities in determining the reasonate in a for crude oil.
In replying to the requests, Secretary Ickes stated the caleulatree Department of the Interior, following the method which pr o described to the conservation commissions of these States, indirstad barrels of gasoline would need to be manufactured at petroleumray, United States during July; that the reasonable market demand for po the l'nited States would average 2,660,000 barrels daily; and that the market demand for crude oil from Texas would average 1.064.400 bar from Oklahoma, 517,400 barrels daily; and from Kansas, 153,AN) bar's Comparison of the July calculations with those for June shows
: average reasonable market demand for crude oil in the l'nited States: barrels higher than the corresponding average for June, wherrytte $ States of Texas, Oklahorna, and Kansas will be 9,600 harrrle hgbe
, that the aggregate demand from the remaining oil-producing State . . will be approximately the same as that calculated previously for June
Petroleum Administrator Harold L. Icked today made puble the for telegram which he sent to Governor E. W. Marland of Oklahos
"Reference your letter July 5 requesting information probable at oil demand and portion applicable to Oklahoma and other important U calculations Interior Department indicate that net reaalne mnent for crude oil in L'nited States during August will average 2.600.6on tayo Same calculations indicate that net reasonable market demand
o m a oil during August will average 512,000 barrels daily, or 3,400 harra than in July. This determination reached on basis of Kansa. Tu tion not to ercred 148,000 barrels daily or 7,600 barrels daily less than this . on account of fact that reports to Department show that stoclu Ka oil held in the l'nited States increased approximately 1,000,000 LAT F' first 5 months this year and Texas crude-oil production bet tu n
a barrels daily or 40,000 barrels daily less than determinatan Jus : . account of fact that reports to Department show that staxoks of Tu ru held in the l'nited States increased approximately 6.000.000 hartie des 5 months this year. Relatise other States, above determinatiua o t e California crude oil production will not prceed 510,000 barrels dsals. Le crude oil production will not exceed 130.000 barreis daily, New Mem .. * exceed 53,000 barrels daily and that crude-oil production other Sun - t exceed the demand figura calculated for June, the total for the 12 L States being 223,200 barrels daily. Trust this information will be bette r
XHIBIT C. FORECAST OF DEMAND FOR Motor FUEL AND CRUDE OIL, APRIL 1937
Summary.The daily average production of crude oil for April 1937, estimated y the Bureau of Mines to meet the demand, is 3,243,000 barrels, which is 84,000 Arrels higher than the estimate for March 1937, and 227,000 barrels higher than le actual of April 1936.
Current situation.- In the last 4 weeks for which complete data are available Feb. 6 to Mar. 6) the production of crude oil averaged 3,310,000 barrels, 131,000 Arrels daily were added to domestic crude stocks, making an indicated market emand of 3,179,000 barrels. The Bureau's estimate of this demand was ,088,000 barrels. The explanation of the apparent "deficiency of about 90,000 arrels lies principally in the fact that gasoline stocks increased about 7,500,000 arrels in the period, whereas the Bureau's estimate for this seasonal build-up, ased on normal gains, was only about 5,200,000 barrels. In terms of crude-oil emand the difference of 2,300,000 barrels is equivalent to about 185,000 barrels aily and more than accounts for the deficiency.
Actual crude production in March is approximately closely the estimated daily verage production required for the year. The best present estimate of crude equired in 1937 represents an increase of about 8 percent over 1936 in the total lemand for domestic crude and an increase of about 10 percent in required proluction, assuming no material changes in crude stocks during the year. Unless otal demand substantially exceeds present estimates, the accumulation of about 1,000,000 barrels more gasoline stocks than was forecast for the first quarter of 1937, together with the recent substantial increase in crude stocks indicates sharper eductions in gasoline stocks and smaller increases in required production for jucceeding months.
MOTOR FUEL Domestic demand.-The domestic demand for motor fuel in April has been Estimated as 42,700,000 barrels, or 10 percent above the actual of April 1936.
Exports.-Exports of motor fuel for April have been estimated at 2,500,000 barrels which is 200,000 barrels more than the March estimate but approximately equivalent to the actual exports for April 1936.
Stocks.--Stocks of finished and unfinished gasoline amounted to 71,416,000 barrels on January 31, an increase of 8,341,000 barrels over stocks on January 1. According to the American Petroleum Institute, stocks were further increased during February by about 8,000,000 barrels, and still further increased in the first 2 weeks of March, indicating that stocks on March 31 may exceed 82,000,000 barrels. (Due to a typographical error in the March forecast, the estimate of this total was erroneously shown as 72,000,000 barrels.) Such stocks appear high when compared with the totals of previous years. However, if the demand for gasoline in the coming season should exceed present estimates, this gasoline may be needed, particularly if the refineries cannot process more than 3,300,000 barrels daily as is the opinion of some authorities.
Gasoline production.-Benzol and direct sales and losses of natural gasoline have been estimated as 800,000 barrels, making the estimated production of gasoline 43,660,000 barrels, which is distributed among the districts as follows (thousands of barrels): East coast, 6,340; Appalachian, 1,620; Indiana-Illinois, 7,490; Oklahoma, 2,910; Kansas-Missouri, 2,750; Texas-Inland, 3,450; Texas Gulf, 9,490; Louisiana Gulf, 1,600; North Louisiana-Arkansas, 900; Rocky Mountain, 1,020; California, 6,090.
CRUDE PETROLEUM Runs to stills.- Natural-gasoline consumption at refineries is estimated as 5.7 percent of the total gasoline required, or 2,490,000 barrels. The yield of straightrun and cracked gasoline is estimated as 44.32 percent, an increase of 0.73 percent over the March estimate. The application of this yield to the estimated straightrun and cracked production of 41,170,000 barrels gives 92,890,000 barrels as the crude required at refineries.
Imports.----Runs of foreign crude have been estimated as 2,800,000 barrels.
Erports, fuel, and losses.-Exports of crude have been estimated as 4,100,000 barrels. The estimate for fuel and losses has been increased to 3,100,000 barrels to adjust it to an upward trend that has developed in this factor.
Required production.—The application of the usual methods to the total required production of crude oil gives the following break-down by States:
TABLE I.—Recommendatory levels of required crude-oil production by States!
(Daily averages in barrels)
1 The recommendations in this table have been calculated as the requirements for the months sister are not intended to be calculations of daily average demand for the current year or for any period os than the months stated.
1 The term "motor fuel" as used in this report includes gasoline, naphtha, and benzol used for all purposes but does not include heavier distillates used in the operation of tractors or burned in Diesel engines.
. Increase. 3 Imports.
MAJOR OIL PRODUCERS Mr. LEAVY. You say the major oil producers; but will you tell me hom you include in the group as major producers?
Vr. HadLICK. Well, generally when we speak of the major oil comanies we speak of the integrated companies; that is, those who proluce, those who refine, and those who own pipe lines and tankers.
Mr. LEAVY. The Standard Oil Co., the Shell Oil Co., the Continenal Oil Co., and the Texas Oil Co.? Mr. HADLICK. Yes, sir. We call those major companies. Vr. FITZPATRICK. What companies do you represent here?
Wr. HadLICK. It is an association of independent oil jobbers loated in some 30 States in the country, all of them east of the Rocky Mountains.
Mr. LEAVY. Has it not been the contention that there is an overproduction of crude oil, and that it was allowed to be produced without limitation, and this is a waste?
Mr. HadLICK. That is the contention. And, of course, there is ground for the statement that there was at one time overproduction of crude oil. In a nutshell, Mr. Chairman, our objection to these forecasts is that by reducing the amount going on the market below demand you raise the price. They had a stabilized production price up to January of this year of about a dollar a barrel. And nobody begrudged it. But it has now risen to $1.20 a barrel.
LOWER COST OF GASOLINE
Mr. LEAVY. Is it your contention that if this Government activity were discontinued that the consumer of the finished product, that is the consumer of the gasoline, would be able to purchase it at a less figure than he now pays for it?
Mr. HADLICK. I believe that is correct.
Mr. LEAVY. And that the Government is unconsciously making itself an agency in keeping up the price of gasoline by disseminating certain knowledge that is prejudicial to the small producer and of advantage of the big oil producer?
Mr. Hadlick. I do not know that it is prejudicial to the independent producer. It is prejudicial to the independent marketer. I do know that. And I think it is prejudicial to the consumer.
EFFECT ON JOBBERS
Mr. HadlicK. Ordinarily we buy from the refiners. Sometimes we buy from the same people who sell locally, or they may sell locally in one State but through jobbers in another State. The jobbers sell about 40 to 50 percent of the petroleum products in the country.
Mr. O'NEAL. You buy from the big fellows as well as from the little fellows, do you?
139751-37-pt. 2— 21
Mr. HadLICK. Yes, sir. There would not be a sufficient supp from the little fellows.
Mr. FITZPATRICK. You do not believe it is necessary to conser the oil supply?
Mr. HadLiCK. Oh, yes; I do.
Mr. HADLICK. I point out that true conservation would involte, we might say, an embargo on exports and the taking off of the imper. duty. The fact is that crude oil has never run down the rivers a into the lakes and been lost, and all that. That is a myth. But: is true that gas has been blown off, which is a waste. But that has been stopped by the States.
We buy in the competitive markets. That is, we want to be a the competitive markets. We sell in a competitive market entire against the competition of big concerns like the Texas Co., who e willing to sell at a loss. They have bottled up the supply of refine products practically below demand. They have been indicted; b: indictments are a slow process. They will go in and purchase any surplus. And why do they do that? It is because they have : blueprint before them as to how much to produce. And those guesses-call them forecasts, if you will have always been below demand, with the exception, perhaps, of the last 2 or 3 months.
Our people do not have a competitive market in which to buy, but they have a competitive market in which to sell. That is what i meant by saying we were caught between the upper and the lowe millstones.
Mr. FITZPATRICK. You believe if the Government stopped sending out this information that it would be beneficial to the people of this country?
Mr. HadLICK. Yes; I really do.
Mr. LAMBERTSON. Would it be to the disadvantage of the sme producers?
Mr. Hadlick. I think not. We would reestablish the competitive situation in the production and refining and selling of oil to the whole salers and consumers. It might involve an adjustment by lowerin crude, which would, in turn, involve an adjustment lowering the prices of gasoline to the consumer. That would be the natural outcome But I do not fear any of this runaway that we have had, because the States have fairly good control over the oil situation in their respecte areas. The States can control waste, over and above that there show, be healthy competition between the oil-producing States for the business of the Nation.
Mr. LEAVY. Of course, the purpose of this law and the appropri tions under it was never to give an advantage to the big producer oil over the small producer, was it?